The FBI official wouldn’t say how the agency had determined that the Bitcoin “wallet”–a collection of Bitcoins at a single address in the Bitcoin network–belonged to [suspect Ross Ulbricht], but that it was sure they were his. “This is his wallet,” said the FBI official. “We seized this from DPR,” the official added, referring to the pseudonym “the Dread Pirate Roberts,” which prosecutors say Ulbricht allegedly used while running the Silk Road.

When Ars called the FBI to confirm Forbes' report, Kelly J. Langmesser, a spokesperson for the FBI in New York, declined to comment.

Forbes also linked to a particular Bitcoin address, which received a massive influx of bitcoins within the last 24 hours. And just like the last time the Internet identified one of the accounts believed to be controlled by the feds, there have been new small donations to that account, ostensibly so that the donors can send comments to the owner of the account. For now, those comments appear only to be advertisements rather than insults, along the lines of "Get cheap USB hubs and networking equipment to your door in 2 days. Bitcoin only of course" and "www.zeroblock.com: Real-time Bitcoin market data and aggregated news feed."

So what will government authorities do with all these seized bitcoins once the case is wrapped up? They'll mostly likely just liquidate (read: sell) them, as with any other seized asset in a criminal case.

Question for those who understand how bitcoin works. I've been under the impression that there are a finite amount of bitcoins and only a certain amount can/will be created, but is that a hard limit? If they were to choose to just destroy the bitcoins, will they allow 26,000 more to be created? Or just let the market adjust to having 26,000 below the max in existence for the life of the currency?

On a different topic, I'm sure they found this through good old fashioned police work. There would be no reason to do anything shady especially if this guy just left the wallet on a random computer that he owned. We know that this guy hasn't been the most careful with his security.

Question for those who understand how bitcoin works. I've been under the impression that there are a finite amount of bitcoins and only a certain amount can/will be created, but is that a hard limit? If they were to choose to just destroy the bitcoins, will they allow 26,000 more to be created? Or just let the market adjust to having 26,000 below the max in existence for the life of the currency?

On a different topic, I'm sure they found this through good old fashioned police work. There would be no reason to do anything shady especially if this guy just left the wallet on a random computer that he owned. We know that this guy hasn't been the most careful with his security.

Once they're gone, they're gone. Bitcoin is designed to be deflationary. However it is designed to be further segmented if need be. I'd be willing to bet there are already a lot of orphaned bitcoins due to lost wallets and such.

As an aside, if they destroyed them, it might cause the bitcoin price to increase as it would increase scarcity. Alternatively, if they sell them I bet it causes a substantial - if only temporary - drop in bitcoin prices as the exchanges get temporarily flooded with sell orders.

Question for those who understand how bitcoin works. I've been under the impression that there are a finite amount of bitcoins and only a certain amount can/will be created, but is that a hard limit? If they were to choose to just destroy the bitcoins, will they allow 26,000 more to be created? Or just let the market adjust to having 26,000 below the max in existence for the life of the currency?

On a different topic, I'm sure they found this through good old fashioned police work. There would be no reason to do anything shady especially if this guy just left the wallet on a random computer that he owned. We know that this guy hasn't been the most careful with his security.

Once they're gone, they're gone. Bitcoin is designed to be deflationary. However it is designed to be further segmented if need be. I'd be willing to bet there are already a lot of orphaned bitcoins due to lost wallets and such.

As an aside, if they destroyed them, it might cause the bitcoin price to increase as it would increase scarcity. Alternatively, if they sell them I bet it causes a substantial - if only temporary - drop in bitcoin prices as the exchanges get temporarily flooded with sell orders.

Why can't they be sensible and slowly sell them on so to get the maximum profit. Alternatively what would dumping them on a USB drive and just selling that.

I'm having a hard time deciding what would be more amusing. The Feds dumping them all on the market at once and causing a price crash or if they just trash the wallet and let the bit coin fanatics go into fits.

The interesting part here is, if they can link ALL of this to the Silk Road... if they cannot, the supreme court is currently hearing a case dealing with civil forfeiture of assets... which, in the case they are hearing, should change the law somewhat... heres the link

I'm having a hard time deciding what would be more amusing. The Feds dumping them all on the market at once and causing a price crash or if they just trash the wallet and let the bit coin fanatics go into fits.

The second one would be less comical, because some of the True Believers would go "Now that the FBI has destroyed those precious children of Satoshi, all of our other Bitcoins are now MORE VALUABLE", causing yet another bump up in price.

I'm having a hard time deciding what would be more amusing. The Feds dumping them all on the market at once and causing a price crash or if they just trash the wallet and let the bit coin fanatics go into fits.

In a twist on option A, the FBI director makes a personal appeal to the Winklevoss Twins. "Your country needs you!"

Um, I may be stupid (probably) but where did that $27 Million figure come from? I thought a bitcoin was worth maybe $100 or $200, not $1,000. 27,000 of them would then be worth $2.7 million or $5.4 million. More sensationalizing?

Um, I may be stupid (probably) but where did that $27 Million figure come from? I thought a bitcoin was worth maybe $100 or $200, not $1,000. 27,000 of them would then be worth $2.7 million or $5.4 million. More sensationalizing?

Current SPOT, just like with any other currency conversion. If I had a million EUR and I needed to describe it in USD I would call it $730,000 because that's what SPOT is for that market at the moment, even though a couple of years ago it would have been $500,000 USD. BTC is more unstable than traditional currencies, so the range is wider.

If the coins in question could be identified, is it possible for the bitcoin exchanges to add them to a revocation list and make them unusable because they were seized under duress?

That would be in violation of the 51% rule, thus ending BTC as a viable currency. In practice, I've only ever seen the collective mining churn do rollbacks to resolve issues, and only when invalid BTC has been issued due to a bug or (very early on) race attack.

Um, I may be stupid (probably) but where did that $27 Million figure come from? I thought a bitcoin was worth maybe $100 or $200, not $1,000. 27,000 of them would then be worth $2.7 million or $5.4 million. More sensationalizing?

Current SPOT, just like with any other currency conversion. If I had a million EUR and I needed to describe it in USD I would call it $730,000 because that's what SPOT is for that market at the moment, even though a couple of years ago it would have been $500,000 USD. BTC is more unstable than traditional currencies, so the range is wider.

I don't think so, just a very confusingly written headline and sub-headline. The $27 million refers to the value of the coins just recently seized (144,000 of them), mentioned in the second paragraph of the story. The 26,000 bitcoin number mentioned in the sub-headline refers to the coins that had previously been seized. I assume the headline/sub-headline pairing was unintentional.

Um, I may be stupid (probably) but where did that $27 Million figure come from? I thought a bitcoin was worth maybe $100 or $200, not $1,000. 27,000 of them would then be worth $2.7 million or $5.4 million. More sensationalizing?

Current SPOT, just like with any other currency conversion. If I had a million EUR and I needed to describe it in USD I would call it $730,000 because that's what SPOT is for that market at the moment, even though a couple of years ago it would have been $500,000 USD. BTC is more unstable than traditional currencies, so the range is wider.

I don't think so, just a very confusingly written headline and sub-headline. The $27 million refers to the value of the coins just recently seized (144,000 of them), mentioned in the second paragraph of the story. The 26,000 bitcoin number mentioned in the sub-headline refers to the coins that had previously been seized. I assume the headline/sub-headline pairing was unintentional.

If you don't believe me here's some grade school level math to prove it:

Um, I may be stupid (probably) but where did that $27 Million figure come from? I thought a bitcoin was worth maybe $100 or $200, not $1,000. 27,000 of them would then be worth $2.7 million or $5.4 million. More sensationalizing?

Current SPOT, just like with any other currency conversion. If I had a million EUR and I needed to describe it in USD I would call it $730,000 because that's what SPOT is for that market at the moment, even though a couple of years ago it would have been $500,000 USD. BTC is more unstable than traditional currencies, so the range is wider.

I don't think so, just a very confusingly written headline and sub-headline. The $27 million refers to the value of the coins just recently seized (144,000 of them), mentioned in the second paragraph of the story. The 26,000 bitcoin number mentioned in the sub-headline refers to the coins that had previously been seized. I assume the headline/sub-headline pairing was unintentional.

If you don't believe me here's some grade school level math to prove it:

Since you didn't refer to the 144,000 BTC number in your original response, I thought you were explaining how the 27,000 BTC mentioned by davnel could be worth $27 million by talking about SPOT, which didn't really answer the question. Currency pricing is definitely part of the explanation, but the more important piece is that the 27,000 BTC figure has nothing to do with the $27 million amount despite how the article headline is written.

If the coins in question could be identified, is it possible for the bitcoin exchanges to add them to a revocation list and make them unusable because they were seized under duress?

There isn't a revocation list mechanism that I'm aware of, but individual bitcoin exchanges/users could refuse to accept bitcoins from the FBI's address or a majority of the miners could refuse to include transactions from the FBI in future blocks (I'm sure there are other options as well). The first option would make it hard to spend the seized coins, while the second would make it more or less impossible as far as I'm aware.

While I think a lot of the Bitcoin community might be anti-government enough think about doing something like that, I suspect they're also likely to consider the precedent that sets. If the value of your Bitcoins is tied not only to the strength of the network and of the underlying crypto but whether or not Bitcoin people like how you got your money, the future of Bitcoin would be in serious trouble. A list of reasons to invalided Bitcoins that starts with "seized under duress" is almost certainly going to grow to include other reasons.

The moment you revoke bit coins from a wallet is the moment it self destructs.

It would be the equivalent of irradiating all the gold in Fort Knox. (In theory all other gold increases in value, in reality all gold would be perceived to be vulnerable and therefor worthless as a backer of currency.)

Um, I may be stupid (probably) but where did that $27 Million figure come from? I thought a bitcoin was worth maybe $100 or $200, not $1,000. 27,000 of them would then be worth $2.7 million or $5.4 million. More sensationalizing?

Current SPOT, just like with any other currency conversion. If I had a million EUR and I needed to describe it in USD I would call it $730,000 because that's what SPOT is for that market at the moment, even though a couple of years ago it would have been $500,000 USD. BTC is more unstable than traditional currencies, so the range is wider.

I don't think so, just a very confusingly written headline and sub-headline. The $27 million refers to the value of the coins just recently seized (144,000 of them), mentioned in the second paragraph of the story. The 26,000 bitcoin number mentioned in the sub-headline refers to the coins that had previously been seized. I assume the headline/sub-headline pairing was unintentional.

If you don't believe me here's some grade school level math to prove it:

Since you didn't refer to the 144,000 BTC number in your original response, I thought you were explaining how the 27,000 BTC mentioned by davnel could be worth $27 million by talking about SPOT, which didn't really answer the question. Currency pricing is definitely part of the explanation, but the more important piece is that the 27,000 BTC figure has nothing to do with the $27 million amount despite how the article headline is written.

In any case, I suspect we're basically on the same page here

Oh I get it... sorry I see where your coming from now. You're right the wording, that is the tag line coupled with the sub-tag line, seems a bit unintentionally misleading. Apologies all around.

Amusingly ignorant. Since there are only 21 million at peak, destroyed or lost coins will only increase the net worth of every bitcoin holder. Furthermore, since a bitcoin is divisible to 8 decimal places, it matters not if there are 21 million or 21,000.

The mainstream predictions top out at $10,000 per bitcoin. That 50x increase in the value of the FBI's seized coins would net a little over a billion dollars. A fart in the wind from the bloated sow that is the US debt.

Funny thing is, I'm pretty sure the Federal government doesn't like BTC all that much. I know that the Federal Reserve doesn't like BTC and cryptocurrencies all that much. I wonder if a few words whispered into the right ears by the banks would encourage a rapid dump of the BTC on the market with the intent of crashing the value and destabilizing it. </tinfoil>

140k BTC is not a small amount, and dumping them (since it's 'free money' anyhow and they're not losing anything) could have a pretty profound effect on value. That in turn could shake confidence, and THAT could cause a lot of damage.

I'm having a hard time deciding what would be more amusing. The Feds dumping them all on the market at once and causing a price crash or if they just trash the wallet and let the bit coin fanatics go into fits.

The second one would be less comical, because some of the True Believers would go "Now that the FBI has destroyed those precious children of Satoshi, all of our other Bitcoins are now MORE VALUABLE", causing yet another bump up in price.

Of course would go up in value, like any other currency or commodity in a free market. Don't let your raging bias towards bitcoiners shut down all rational thought.

Market sell right now of 144,000 coins would net $13M USD and bring the exchange price down to $94. It would quickly recover of course since many professional traders will have their buy orders ready to load up at that bargain price.

Yes dumping them would shake confidence, but it would not be a lasting effect. It does nothing to change the fundamentals of bitcoin.

If the coins in question could be identified, is it possible for the bitcoin exchanges to add them to a revocation list and make them unusable because they were seized under duress?

There isn't a revocation list mechanism that I'm aware of, but individual bitcoin exchanges/users could refuse to accept bitcoins from the FBI's address or a majority of the miners could refuse to include transactions from the FBI in future blocks (I'm sure there are other options as well). The first option would make it hard to spend the seized coins, while the second would make it more or less impossible as far as I'm aware.

While I think a lot of the Bitcoin community might be anti-government enough think about doing something like that, I suspect they're also likely to consider the precedent that sets. If the value of your Bitcoins is tied not only to the strength of the network and of the underlying crypto but whether or not Bitcoin people like how you got your money, the future of Bitcoin would be in serious trouble. A list of reasons to invalided Bitcoins that starts with "seized under duress" is almost certainly going to grow to include other reasons.

I like your version better than what I was going to say, but mine is pithier:

"Wouldn't an ability to revoke individual bitcoins go against everything bitcoin is trying to accomplish?"